Business Model VS Strategy

Business Model VS Strategy

When startup founders reach out to me, the one invariable topic of discussion revolves around the #businessmodel. I understand their rationale because when you start a business and when the founders are unsure about its future, the most basic question that any investor ask are:

1)How will the firm generate money?

2)Where will the revenues come from, and what are their costs?

3)How and when will the business become profitable?

The business model helps founders explore answers to the above questions.

However, in my view, the ๐›๐ฎ๐ฌ๐ข๐ง๐ž๐ฌ๐ฌ ๐ฆ๐จ๐๐ž๐ฅ ๐๐จ๐ž๐ฌ๐ง’๐ญ ๐ก๐ž๐ฅ๐ฉ ๐ฌ๐ญ๐š๐ซ๐ญ๐ฎ๐ฉ๐ฌ ๐๐ž๐ฏ๐ž๐ฅ๐จ๐ฉ/๐š๐ฌ๐ฌ๐ž๐ฌ๐ฌ ๐œ๐จ๐ฆ๐ฉ๐ž๐ญ๐ข๐ญ๐ข๐ฏ๐ž ๐š๐๐ฏ๐š๐ง๐ญ๐š๐ ๐ž. Thus, founders should have aย #strategyย that answers any investor on:

1)How can we make more money than competitors?

2)How long can we generate superior returns than our competitors?

In effect, a sound strategy looks at ๐™ง๐™š๐™ก๐™–๐™ฉ๐™ž๐™ซ๐™š ๐™˜๐™ค๐™จ๐™ฉ๐™จ/๐™ฅ๐™ง๐™ž๐™˜๐™š๐™จ ๐™–๐™ฃ๐™™ ๐™ก๐™ž๐™ฃ๐™ ๐™จ ๐™ฉ๐™๐™ค๐™จ๐™š ๐™ฉ๐™ค ๐™ฉ๐™๐™š ๐™–๐™˜๐™ฉ๐™ž๐™ซ๐™ž๐™ฉ๐™ž๐™š๐™จ ๐™–๐™ง๐™ค๐™ช๐™ฃ๐™™ ๐™ฉ๐™๐™š ๐™ซ๐™–๐™ก๐™ช๐™š ๐™˜๐™๐™–๐™ž๐™ฃ ๐™–๐™ฃ๐™™ ๐™ช๐™ก๐™ฉ๐™ž๐™ข๐™–๐™ฉ๐™š๐™ก๐™ฎ ๐™ฉ๐™ค ๐™ฉ๐™๐™š ๐™‹๐™‰๐™‡/๐™—๐™–๐™ก๐™–๐™ฃ๐™˜๐™š ๐™จ๐™๐™š๐™š๐™ฉ.

Thus, i always tell founders that if you want a viable business, the business model helps, but if you wish for superior profitability, develop a sound strategy.

Thus, founders should move away from ๐—ง๐—”๐—  ๐—ฎ๐—ป๐—ฑ ๐—บ๐—ฎ๐—ฟ๐—ธ๐—ฒ๐˜ ๐˜€๐—ต๐—ฎ๐—ฟ๐—ฒ and start thinking about theย #valuechainย and how their business will develop a sustainableย #competitiveadvantageย that helps achieve superior profitability over its competitors.

As an investor/VC firm, i am interested in that part of the pitch deck.



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